September 7, 2012

The Jobs Number: Doesn't Change Where We Are, But Where We Are Ain't Great

I’m in a strange place when I assess Obama and the economy these days. Having written a book that catalogues my disappointment in both, I’m the first to say their performance could be better. On the other hand, I long ago adjusted my expectations downward. When I see I jobs report like we got today—a middling 96,000 jobs in August, along with 40,000 worth of downward hits to June and July—it’s not a crushing blow. It’s a basic affirmation of where I’ve assumed we were for a while now. As with my take on Obama’s speech, this can have the perverse effect of making me sound somewhat bullish.

Where we are is this: The economy is growing modestly, the job market is keeping up with population growth. This is never a great thing. It's a lot worse when you’re only a few years out from the most horrifying recession in 80 years. The hole is so deep that we’ve got to grow much faster than usual to dig our way out of it, and instead growth is slower. Having said all that, though, we’re still not so far removed from the dark days of 2009 that we can scoff at modest growth. There are far worse alternatives still fresh in people’s minds.

The upshot, as I’ve argued before, is that the economy is probably strong enough to re-elect Obama—nothing I see in the unemployment report changes my views on that. But the trajectory is such that, sometime over the next four years, the demoralizing grind of our current limbo is going to take a real toll. When it does, Democrats are going to be in a rough place politically, to say nothing of the unemployed and underemployed, who will be in a tragic place economically.

The fact is that the economy just isn’t repaired yet. The farther we get from the heyday of the stimulus (which I thought was critical but much too small), the more apparent this becomes. In 2011, when we were feeling the effects of both the initial stimulus and the extra cash the government had ponied up since then (most notably the payroll tax cuts and unemployment benefits Obama and Congress agreed to after the midterm elections), monthly job growth was about 150,000. This year it’s down to 139,000. And, as Jared Bernstein, Joe Biden’s former chief economist, notes, the average in the last five months is a mere 87,000.

As I say, the stall-out isn’t abrupt enough to change the shape of this campaign, except maybe at the margins. (It takes what Romney and Ryan had made into a “choice” election and nudges it back toward the economic referendum Obama wanted to avoid.) But it will almost certainly change the shape of the next one, and probably several more after that.